Regardless of what you are insuring, every insurance premium in the world is based on one thing and one thing only, risk. The higher the risk of the insurance company having to pay to repair or replace the insured object, the higher the insurance premium. That’s true for home insurance, life insurance, and car insurance.
When it comes to insuring a car, risk is calculated based on a variety of factors, but the driver is certainly one major variable says a finance and insurance expert at Mercedes-Benz Ottawa.
The age of the driver will play a large role in figuring out the final insurance cost. Younger drivers tend to get into more accidents, which means that insurance companies see them as more risky. Therefore, the younger you are, the higher your insurance premium.
Gender also plays a role given that men tend to make more claims than women. So, if you are a young male, expect to pay a lot more than an older woman.
After the driver comes the vehicle being insured. Obviously, a more expensive vehicle will be more expensive to insure. The type of vehicle, and more specifically if it is a sports car with a powerful engine, will also play a role.
Driving experience will then be taken into account. The policyholder’s experience is measured by the number of months he or she has had a driver’s license, and obviously the longer you have had your permit, the lower your insurance premium will be.
And finally, where you live also matters. If you live in an area where accidents or thefts are more frequent, then your insurance company will take that into account. As a rule of thumb, it usually costs more to insure your vehicle when you live in the city compared to living out in the country.
As you can see, you do not have control of many factors, except perhaps where you live and the type of vehicle you buy. In any case, it’s always important to take the time to shop different insurance companies in order to make sure you get the very best deal.